Barry Ritholtz had a post up last week in which he appealed to Realtors to realize that the NAR propaganda of “always a good time to buy” does not help NAR’s chief constituency, which is Realtors.
What the NAR was offering to buyers, sellers, their agents, indeed, anyone involved with Housing, was theblue pill.
The sort of nonsense the Realtor’s group peddles helps explain why sellers have incorrectly believed a recovery was imminent, even as housing went through a historic collapse. It is why home owners incorrectly still expect their homes to go appreciate by 10% a year.
These false beliefs have real world consequences. They create ridiculous expectations among sellers, who selectively grab onto any positive news they can. They choose the temporary blissful ignorance of illusion — that damned blue pill — versus embracing the painful truth of reality (i.e., the red pill).
Barry goes on to make the point that volume of deals is as important to Realtors as dollar amount of individual transactions.
I would probably only disagree with Barry to the extent that I would not lay the blame at the feet of NAR. As far as I’ve ever been able to tell, individual Realtors do not need talking points coming from NAR in order to push the “always a good time” message. I’ve actually heard residential Realtors trying to close a deal by telling a potential prospect that if they waited, they would only get priced out of the market – and the best part in this case was that the market was falling at that time!
The problem isn’t that there is a trade lobby that has taken it upon itself to spin things in an overly positive tone. The problem isn’t even limited to Realtors that often have no basis of knowledge for “advising” their clients on buying a home (an interesting exercise would be to poll Realtors and see how many even think of themselves as advisors). The problem is also not limited to a home-buying public that knows nothing about housing as an investment, and yet approaches housing as if it were an investment.
The reality is that every one of these groups (the trade lobby, the Realtors themselves, and the public) share some culpability. The trade lobby largely mirrors the sentiment coming from the individual Realtors. The Realtors survive in the process because the home-buying public is fine buying a house through a friend, an acquaintance from church, or whoever the listing agent happens to be on the house that they call about. The housing consumer does not care that the person that they buy the house through is not an advisor, and likely does not even think of themselves as an advisor.
The notion of “it’s always a good time” can really only be successful with a home-buying public that isn’t taking the investment very seriously to begin with.
